Retail

Post-Pandemic Inflation and Rising Customer Acquisition Costs

Photo by Sharon McCutcheon on Unsplash

The national average price of a gallon of unleaded fuel hit $3.04 today. After enjoying a three year period of indulgence in muscle cars and big pickups, US consumers are coming to grips with the fact that $50 spent at the pump doesn’t raise the needle on the gas gauge nearly as far as it did pre-pandemic.

The price of a standard size 3/4 inch sheet of plywood is widely reported to have increased 252% over the past year. That figure was benchmarked by a retail price of $95.98 in April 2021. Ahem, in pursuit of a small home project, we recently paid $107 per sheet, telling us the enormous increases have yet to reach a ceiling.

The price of food has increased an average of 3.5 percent over each of the past two years and the pace of increase is forecast to continue in 2021.

Inflation is on the rise, and the search for underlying causes pins the blame on everything from the pandemic, to reduced production capacities due to job loss, to political leadership. There’s also the matter of increased demand for many products and services as people emerge from a year in quarantine and self-shelter and attempt to make up for lost time through buying, building, and consuming.

We’ve noticed some extraordinary offers from airlines, hotels, and card issuers over the past 90 days that tell us the price of customer acquisition is skyrocketing along with more familiar aspects of the economy.

Delta Airlines said, “Don’t Miss Our Highest Mileage Offer Ever” in an April 14 email. The offer was up to 70K bonus miles or up to $350 off per booking on any flight + hotel package reserved, with no minimum purchase necessary.

jetBlue floated a similar offer for “high value perks worth $100 or more” when booking a flight plus hotel package.

Marriott Bonvoy teamed up with Uber to offer 6x points per dollar spent on Uber Eats orders of $25+ that are delivered to any hotel within the Marriott portfolio.

Microsoft opened a contest with a chance to win “$250,000 cash, a Surface Pro X, millions of points and so much more”, all for playing its Select 3 game

Marriott Bonvoy and American Express offered “100,000 bonus points and up to $150 back in statement credits” when applying for the Marriott Bonvoy Business™ American Express® Card. Conditions apply, but this is still an aggressive offer.

Chase bumped an offer of 100,000 points per year for referring friends and family to the Marriott Bonvoy™ Credit Card from Chase to 200,000 bonus points per year.

The noise in customer-facing marketing channels is deafening as brands strive to reconnect with customers whose normal routines were derailed over the past 15 months. How do you break through the noise? One way is to create massively aggressive offers that causes consumers to open email, click through links, and jump at the call-to-action.

The offers we collected for this article are a small subset of what we are seeing in the broader marketplace. All brands are navigating through an interesting time in business as the economy restarts post-pandemic. There may be a sense that this is a singular opportunity to gain the attention of consumers as they end their forced hibernation.

The spike in the size of the bet brands are placing to win back customers certainly reflects the desperate state of the travel, hospitality, and payment card sectors. We’ll be watching closely to see if this trend spreads to retail and if this offer pattern continues. Most importantly, we’re wondering how the return on investment for acquisition of new customers will be impacted.

As we monitor these trends, we invite you to send us examples of the offers you are seeing that grab your attention today.

Post-Pandemic Inflation and Rising Customer Acquisition Costs
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